Enterprise Resource Planning systems (ERP) are the central instrument of corporate management today. They have been established in almost all companies as the means of increasing the efficiency and transparency of the tasks and processes in finance as well as in relevant areas of order processing (sales, materials management, production planning and control and project management). ERP systems also play an important role in the wake of the increasing digitalisation of business processes: They serve as the „Single Source of Truth“ where central master data and transaction data from the value chain are concerned (e.g. material, article and customer master).

Thus, ERP software is an important factor for a company’s business success. During the past ten years, Trovarit has regularly studied the reality of ERP in companies by asking the users for their experiences. The survey „ERP in Practice“ examines both the benefits of ERP usage and the challenges posed by ERP implementation and ERP operation. One of the study’s focuses is on the users‘ satisfaction with their ERP systems and the services rendered by the vendors. Finally, important trends and developments concerning ERP usage and the ERP market are revealed and evaluated from the point of view of the users.

The survey has been conducted for the seventh time since 2004. The international research team consisted of experts from the FIR, ERP-Tuner/Vienna, 2BCS AG / St. Gallen, pragmatiQ/Zoetermeer and Trovarit Ltd./Istanbul. The broad empirical basis is used to elicit which systems are installed in the companies, what they are used for and how they are managed. Finally, the study shows how satisfied the users are in daily practice.

 

Specialisation, Up-To-Date Releases and Customer Care are Rewarded

main-portfolio-erp-practice-2014-294x300As in the years before, „lean“ ERP solutions, solutions for specific industries and/or solutions from smaller vendors perform best, whose customers are mainly smaller or middle-sized companies. The best solutions for larger companies can be found in the second half of the field. However, the portfolio also shows that specialists and smaller ERP vendors or systems are not guaranteed a top position.

Why do some of the smaller vendors get such good ratings?
Several reasons can be cited for this and backed up by further analyses:
Low complexity: Leaner and/or functionally focused ERP systems are less complex so that implementation and administration / updating are easier.
State-of-the-art technology: The installations are used in up-to-date releases and usually have good ergonomic user-interfaces and user-guidance.
Close and intact customer relationship: smaller, local or specialised vendors usually have a manageable customer base and thus far better possibilities to maintain intensive and individual relationships with their customers.

If one considers the ERP systems which are mainly used in smaller and mid-sized companies, one notices the good positions of industry-specific solutions like e.g. work … for all! (professional services), MAJESTY (precision and medical engineering), SIVAS (plant construction) or OpaccOne (wholesale and retail trade). Likewise, some of the ERP solutions which are mainly used in smaller companies perform above average, like e.g. TOSCA, the cloud solution myfactory, Orlando or HS – Hamburger Software. Most of these solutions are also marketed with a clear regional focus.

If one takes a closer look at the different satisfaction aspects, the picture is much more differentiated. On the x-axis, the portfolio shows the average degree of satisfaction for all examined aspects from all 2,393 analysed installations. The y-axis shows the stability of the ratings based on the variance of the single values – and thus , in reverse, the degree to which the different satisfaction parameters can be influenced, respectively how great a risk is attached to them.

ERP users can assume that aspects with a high stability in the ratings are relatively fixed. If the stable rating is rather good, you get the aspects which users can depend upon („Safe Basis“). If the stable rating is rather bad, one has found the aspects which pose a „Constant Challenge“. Aspects with a low stability can be influenced to a great degree either by the user or by the vendor. In the best case, this is where you know the „Wheat from the ChafF“ while in the worst case you recognise the aspects which are always in danger of giving „bad surprises“.
The aspects which should be kept an eye on during projecting are:

  • system-related aspects like „mobile usage“, „forms and reports“, „internationality“, „costs of data maintenance“, „usability / user-friendliness“, „performance“ and „integration interfaces“
  • classic project-related factors like „keeping to budget“, „keeping to schedule“ and „staff requirements“ as well as
  • support-services like „offer of training and information“ or „consulting“ for the optimisation of ERP usage.

In fact, „mobile usage of the ERP software“ is the new aspect to bring up the rear. It seems that the limitless use of the ERP solutions at „any time and any place“ is not as real as users expect it to be today – especially when compared to other software applications, not least in the private area.

Overall, the „international deployment of ERP software“, which was analysed for the first time, also proves to be a weakness. The aspect gets a B- which indicates that there are great differences when it comes to addressing the different legal and language requirements which accompany the international deployment of a central ERP solution.
Compared to the results of 2012, a number of the former weaknesses, e.g. „releasability“ and „forms and reports“ as well as „commitment of the consultants during the project“ and „support for release changes“, get better marks. The ratings for „user training upon ERP implementation“ and „offer of training and information“, on the other hand, changed for the worse.

A more discriminating look at the satisfaction aspects shows, that the overall satisfaction with the ERP system and the vendor is high while there are important weaknesses in the particulars. If one looks at the satisfaction with the system, for example, it becomes obvious that the overall impression is rated far better than almost every single satisfaction aspect relating to the system. For ERP vendors this means that they have to go into detail when they are looking for improvement potentials.
A similar situation can be observed for the rating of the implementation project: Here, the positive overall ratings are proof of the typical characteristic of infrastructure projects, where the responsible employees tend to assess the situation better than it objectively is.

Topics and Trends in the Context of ERP

relevance-of-erp-trends-2014The study shows that the way users handle the systems and what they expect from their ERP systems change significantly over time. In 2014, the top drivers and trends are topics like „better usability“, „mobile use of ERP“ as well as a „role-based and context-related user-guidance“. These are directly related to the use of ERP software as a tool for everyday work.

The mobile use of ERP software is common today – at least when one takes the term to mean the use via the internet on a laptop. The use over smart phones or tablet PCs requires a completely new designed user interface because of the limited space on the screens and operation via touch screen. A number of ERP vendors are working fervently on this new design.

Similarly problematic is the „offline ability“ of the ERP applications. In view of the still occurring gaps in the network coverage this remains a necessity.
The next positions in the topic ranking are taken up by „international deployability“, „Enterprise Application Integration or interface management“ and a comprehensive „Enterprise Information Management“. This points to a significant trend towards a better integration where the distribution or supply of information is concerned – be it across company levels, departments or even subsidiaries and regions: The aim seems to be to manage the resource „information“ more comprehensively and more target oriented in the future.

Some of the topics which are discussed in specialist media and circles, however, reveal significant need for clarification: Only 5.7 % of the respondents say that „cloud computing“ is very relevant in connection with ERP. When it comes to „Social Media“ the portion is even smaller at 5.2% and „Industry 4.0“ brings up the rear with a meagre 4.1%. Obviously, there is still a high demand for information: almost 40% of respondents admitted, that they did not know (yet) what the term „Industry 4.0“ meant. This is also true for topics like „Big Data“ or „Bring Your Own Device/BYOD“.


If your market does not stop at country borders, then neither does the need to plan and control your business processes! But can your ERP software handle foreign languages, laws and regulations? Does your ERP vendor supply full technical support abroad?
index.phpWhen businesses “go international” they do this to open new markets, accelerate growth and increase profitability. But to take advantage of these opportunities, they must be able to master quite a number of new challenges: They must manage financial operations across countries with different currencies, for example, different tax laws, and reporting and oversight requirements. International businesses must be able to manage financial consolidations at multiple levels, each subsidiary needs to have local operational control, and the parent company must be able to roll up data into consolidated financial reports.

Today, this basically means that they must have software which can do all this.

All modern ERP systems are designed for international deployment – well, theoretically. In practice, more than twelve years of experience with hundreds of ERP projects has taught us that, at least at present, there is no ERP vendor whose products are available with their full functional scope in the same quality, worldwide.

 

number of used languages.phpNo English, please

The support of multiple languages is a central requirement of ERP systems for international business. If a company delivers goods to foreign countries it should, for example, be able to print out shipping notes in the national language – no matter where the company offices are. Hence, the ERP software must support unicode in order to be able to process special characters like Arabic or Russian letters. This is even more important when the company has actual branches or subsidiaries abroad: In this case, also the user interface and the help system must be available in the national languages. English as the „world language“ is no adequate alternative in many countries because not all users of an ERP system have the necessary educational background or, indeed, the cultural willingness.

Legally Sound?

Different countries, different laws – and different currencies. This fact gets to many businesses worldwide. Even within the EU, and for a standard process like invoicing, you need to consider different conditions, like different VAT rates. The same is true for custom’s regulations and environmental legislation. In addition, countries like Russia or China have a tendency to change their legislation more often than most European countries.

Multi-Site-Management for Intercompany Processes

A well-known task for companies working with contract manufacturers abroad: A customer from country A orders a product which is manufactured in country B. Shipping note and invoice are created by the headquarters in country C. A high degree of automisation is required for this process to run quickly and smoothlessly. Normally, modern ERP solutions provide the necessary functionality for this but in detail these systems can handle these tasks quite differently. Therefore, decision makers should ask for a demonstration of processes like this – preferably under realistic conditions – in order to be sure that the system matches their own business. Equally important is a centralised data management which supports fast and well-founded business decisions with transparent financial figures and an efficient controlling.

ERP as a Program for Growth

International growth does not only affect the number of customers and new markets. It can also mean a new legal form, additions to the organisational structure – e.g. the acquisition of a production site – or new sales channels. All these must be integrated into the company’s processes quickly and without friction. Therefore, ERP solutions must be adjustable with regard to different dimensions. In fact, high scaleability and flexibility are core requirements when the ERP software is supposed to further international growth instead of hindering it.

International Support

Our experience shows that the co-operation between vendor, implementation partner and user company is critical for the success of ERP implementations. For international ERP projects this means that decision makers should explicitly ask about local support abroad – both during implementation and afterwards.

  • Does the vendor have own offices in the relevant countries?
  • Which services does the vendor perform locally?
  • Are there local personnel resources for technical problem solving?
  • Does the vendor have partners with native experts in the relevant countries?
  • What is the basis of the co-operation between the branches and/or partners in different countries?
  • What are the qualifications of the persons acting on behalf of the vendor in the relevant countries? Certificates? References?
  • Who is the central contact for the customer?
  • Is there a uniform and transparent software implementation method with standardised reporting concerning the project?
  • What are the rough steps of the roll-out? Is there a guarantee that the future users will be trained in their native language?
  • How is support organised after implementation?

In most cases this is not required anyway. However, the fact, that not all products can be deployed to all countries makes it so important to have a clear notion of the requirements for each subsidiary early on in the project, so that the matching product – or combination of products – can be found. Ideally, these requirements also include foreseeable future requirements, resulting from the expected further development of the business. Whatever the requirement, which finally tips the scales towards one product or another – there are two aspects, which are k.o. criteria for the selection of a software solution in international projects: experience with the country in question and available local support.

 


The main goals of ERP usage can be summarised in one sentence: „‚Fast access‘ to ‚better information‘ in order to ‚optimise business processes’“.

The end-user of the ERP software tool plays a central role in this context: After all, the user is often the supplier and almost always the recipient of the data and the information processed by the ERP system.

Hence, aspects like practicality and ergonomics of the ERP software are important criteria when it comes to software selection – albeit clearly behind functionality and ergonomics.

 

erp-selection-criteria

It’s easy to follow this priorisation because the ERP software needs a specific functional scope in order to provide the required support for the business processes. Also the demand for high flexibility is understandable as company structures and processes rarely stay the same over a long period of time.

At the same time, the increasing digitalisation of business processes – not least driven by the ever more comprehensive and powerful ERP systems – holds a number of challenges for the user because it is very often accompanied by a significant rise in complexity. Especially new employees and occasional users are hard put to cope with this.

Thus, it is no surprise that user-friendliness has not been one of the strengths of ERP systems in the past.  In fact, users regularly marked down the systems for their lack of ergonomic user guidance and ergonomics can be found among the „Constant Challenges“.

erp-and-ergonomics

 

This criticism must be seen against the background of the very user-friendly, self-explanatory software the users know from their private lives. The image of the small child, who intuitively and easily uses a smartphone app, is a reference which is miles away from what ERP systems offer today.

However: Whatever the reason – the regular criticism of their customers, the good example of many apps or simply the fact, that ergonomics and efficiency of ERP use more and more become a USP – ERP manufacturers seem to pay increasing attention to their softwares‘ usability.

Aiming at a new „User Experience“, they invest in new approaches like, e.g.

  • a user-centric, role-based interface design
  • workflows for a better user guidance and
  • „app“lification of complex business software products

And these efforts seem to pay off because user of modern ERP systems and up-to-date releases give much better marks for user-friendliness than users with older software installations.

 

ergonomics-release-dates

 

 


The ERP – Area program at CeBIT 2014 relies on facts and expertise when it comes to the future use of ERP software in the company . Trovarit, the producers of the ERP-Area Blog have again been commissioned to organise the ERP Forum and Guided Tours at CeBIT (March 10 to 14 , Hannover). Together with our partners VDMA and FIR at RWTH Aachen University, we have chosen the motto „ERP 2020: ERP of the future – the future of ERP“ for the event, thus placing the question of how ERP use and ERP software will develop over the next few years in the focus. And we don’t even need a chrystal ball nor a clairvoyant because recent studies reveal already today the trends that will shape the use of ERP software in the companies, the most significant being mobility, usability and connectivity. In the lectures, and discussions on the ERP Forum ( http://www.trovarit.com/termine / erp area.html) and the Guided Tours analysts, ERP users and vendors show, where we are heading and how, even today, the right course can be set with the help of innovative solutions. „Mobile Solutions – Business on all channels “ is the overall headline for the ERP Forum on Tuesday. Mobility is one of the main drivers of new developments in the business software industry: Private life, work and business alike are influenced by the growing variety communication means (hardware and software). Mobile solutions are ubiquitous, continuously available, they allow the fast and efficient exchange of information and can greatly facilitate the internal and external communication. The lectures on that day discuss the opportunities and the challenges that arise from these developments, particularly in the area of ​​business software. The ERP Comparisons also focus on pioneering technologies and functions. Two ERP vendors present live on stage how their ERP solutions fulfill a given task. Five „scenes“ show how the software supports the ordering, production and shipping of the „Gütebox“ (Quality Box). Of course, some special challenges have been included into the concept which need to be overcome. The ERP Live Comparison is designed by GPS from Ulm. Up to four ERP vendors get the chance to show how powerful their software is even today during the Guided Tours „ERP 2020“. Organized and carried out in cooperation with the VDMA, the vendors are asked to present their solutions on the basis of a practical example. Visitors not only get to see in how far functional requirements are covered but also how the user interfaces are designed in terms of ergonomics and user-friendliness.


The planning  and control of the intra-company and extra-company logistics for the plastics industry pose a great challenge for ERP systems. Characteristics of  ERP Usage in the Plastics Industry Production procedures like die casting or extrusion are widely used in the industry. Among others, the distinctive characteristics are:

  • a pronouced process character with batch production,
  • coupled production,
  • a very distinctive tool management (basic tools, moulds) considering availabilities and idle times as well as
  • an intensive use of machine data acquisition (MDA) for in-process quality management (e.g. inline recycling) and manufacturing control (e.g. number of shots, machine status).

Finally, many companies in the plastics industry are subject to additional requirements from their customers‘ side which have a great influence on ERP usage: Thus, automotive suppliers often have to support very complex packing regulations or suppliers for medical engineering companies must be able to guarantee a consistent retraceability of components. Aims of ERP Usage in the Plastics Industry The Trovarit survey „ERP Practice: User Satisfaction, Benefits and Prospects“ shows that the plastics industry in special uses ERP to optimise the degree of capacity utilisation of their (often expensive) machinery, reduce costs and increase customer satisfaction with order processing (e.g. adherence to delivery dates). In order to achieve these aims companies in the plastics industry place great value on adequate software functionality even during software selection. In addition, the software is expected to be suitable for mid-sized companies, user-friendly and as flexible as possible. The cost/benefit ration and the ERP vendor’s expertise are also important selection criteria. ERP Systems: The Specialists Against the background of these pronounced characteristics, it is no great surprise that the specialists among the ERP systems are the leaders of the pack in the plastics industry. Next to AlfaPlus (SWP Irma), STEPbasic (STEPSOFT), PPS-Plus (HKS-Systems) and FOSS (Ordat) the „ERP giants“ can also be found: Sage (wincarat) and Infor (Infor ERP COM) are directly offered for the German speaking market while Microsoft (e.g. Modus Plastics/Modus, Dynamics Plastic Technology/KCS) and SAP (All for Plastic/All for One Steeb, it.chemicals/itelligence) enter their partners with „industry solutions“ in the race. ERP Usage: The Plastics Industry’s Verdict The ERP infrastructure used in the plastics industry must not only be able to map many distinctive features but is also very complex: In addition to the ERP core (finance accounting, order processing and PPC) many companies also use modules for production data acquisition (PDA), MDA and CAQ as well as for CRM and SCM. In everyday business, these challenges are certainly felt which is also mirrored by the assessment of the used ERP systems by the companies of the plastics industry: Hence, a great number of these companies criticise the expense needed for updates and release changes as well as the systems‘ unability to really map their business processes because of functional deficits. Obviously, the high degree of integration in combination with – often necessary – extensive customisations of the software standards has a negative impact on the ERP softwares’s releaseability.


ERP users are facing a great number of trends at the moment: The experts tell us that „Cloud ERP“ is ultimately unavoidable because it guarantees a flexible and cheap ERP usage; „Big Data“ is the means of mastering the continuously growing flow of data, „Business Intelligence“ transforms these data into useful information. „Business Apps“ and Smart Phones or Tablets render ERP usage mobile and makes it possible to access one’s ERP software from everywhere at anytime. „Social Networks“ (LinkedIn, Facebook etc.) open up new opportunies for marketing and sales and also have a positive influence on the loyaly of customers and employees. Beyond these hypes, current practice reveals that more and more business areas are „digitalised“. Thus, software landscapes are growing further into areas like CRM, ECM, BI and SCM. The aim is commonly agreed upon: smooth cross-departmental order processing without problems caused by media discontinuity, multiple data entry and inconsistent data maintenance. However, there are two opposing trends: One is the trend towards increased integration with one-stop software packages which meet all requirements. The other is often envisioned as a „best-of-breed“ solution, where the best specialist softwares are combined freely to get the optimal result. The protagonists of „integrated ERP solutions“ stress the benefits of continuity and uniformity which are to be expected from a single software manufacturer. The representatives of the „best-of-breed“ approach highlight the benefits of specialisation and, when asked for interfaces etc., refer to the available software technologies and standards. Finally, legal matters come up in connection with ERP: New regulations, like SEPA, e-invoicing and e-balancing, for example, create new requirements with regard to ERP support.

Orientation is Necessary

Against the background of this flow of trends, companies that want to invest into their ERP infrastructure – be it the modernisation of the existing software or the acquisition of a new one – should concentrate on the essential: An ERP solution is a tool which helps to inject some life into a company’s strategies to increase their power to compete. Thus, the Trovarit survey „ERP / Business Software: Nutzenbeitrag der Modernisierung“ („ERP / Business Softare: Benefits of Modernisation“) identifies the most important strategy with relevance on IT as „implementation of more efficient and faster business processes“, closely followed by strategies which aim at an efficient re-design of processes. Of course, the essential goal of a company’s ERP system and , indeed, its IT infrastructure will always be to supply the best support for its business processes by means of a complete and mature set of functions. However, against the background of increasing process dynamics and cross-departmental information networking, the ability to adjust business processes and the relevant business software to changing  conditions becomes more and more important. Vorteile moderner ERP Lösungen
These developments raise new requirements both on the strategic and on the daily operative levels which should be considered for ERP selection. Amongst others, these are:

  • Openness for adjustments due to a suitable modern software architecture. Service-oriented architectures and adequate models with clear rules for customisation by manufacturers, suppliers of industry templates, implementation partners and users make customisation easier and protect the releaseability of the customised installation.
  • Good modular add-ons with additional functions. An integrated solution (e.g. for CRM, ECM or BI) as an additional module of the ERP software already in use is usually easier to implement and to maintain than an additional stand-alone solution connected via interface.
  • Easy connection via existing standard interfaces. The availability of standard interfaces reduces expenses and avoids the risk of individual development.
  • Ergonomic user-guidance. Intuitive, clear and easy useability is important for an ERP software’s efficiency when it comes to dealing with everyday tasks. It also makes the training of employees easier and leads to high acceptance among users. The software is used sooner and more comprehensively, while workarounds based on excel etc. are become more rare.
  • Tools for the implementation and management of customisations of processes, data structures, user interfaces and forms.

Recommendation for Mid-Sized Companies

The trends discussed above lead to a virtually unmanageable range of software solutions targeting the market of mid-sized companies. The evaluation and selection process can be quite arduous for a company and – considering the incurred costs and expenses as well as the long-term impact of a new ERP implementation on the business – it is not without risk. Therefore, even mid-sized companies should use a structured methodology which indicates a clear path from requirement specification (processes, requirement specification sheet etc.) to market search (tradeshows, magazines, internet etc.), to a feasible short-list. Afterwards, presentations and system tests are suitable means to identify the best candidate for contract negotiations. Some points which should be considered:

  • Functional fit
  • Knowledge and expertise of the implementation partner when it comes to one’s own industry and general project management
  • The vendor’s size and local representations
  • Modern technological basis
  • Ergonomic user-guidance
  • Adequate flexibility
  • Suitable provision concept

However, a new implementation is not the only time when one has to look into one’s business software. ERP software is often used for up to and beyond 15 years and with new technological developments respectively changing business ERP and processes almost inevitably drift apart. If one wants to keep benefiting from one’s ERP software, it is essential to regularly modernise the software and – if need be – adjust the business processes. The Trovarit survey clearly proves that ERP installations which are up to date technologically are assesed far more positive by their users. Especially with regard to simple, transparent and fast processes more up to date installations get very good marks. It becomes clear that a regular maintenance of the solution landscape can be as effective when it comes to the mastering of one’s processes as a successful new software implementation.

 


 

triggers-for-ERP-projects1The age of the ERP software used is still by far the most dominating trigger for the implementation of a new ERP. However, this aspect has lost some of its relevance in the course of the last 10 years or so (since 2000 -20.7 %, finishing at 31.2% in 2012). Instead, the implementation of a new ERP Software is increasingly triggered by the companies‘ dissatisfaction with their ERP software or the ERP vendor (2010: 17.3%, increase: 8.1%). This aspect is especially relevant for smaller companies and for service providers and comes in second in the top 10 triggers for ERP projects. Another frequently mentioned trigger is the fact that the used ERP infra tructure cannot fulfill all of the new requirements originating from changed business processes or a changed business orientation. Other aspects are less important or only relevant for selected market segments: Larger companies (>500 employees), for example, exchange their own developed systems for standard ERP software. This trend shows that standard ERP software has matured so far so as to make the expenses for the maintenance of individual solutions unnecessary. Production companies often stated that the system they had been using respectively their former ERP supplier are no longer on the market. Migration, caused by a changed maintenance contract, has increased significantly over the last 10 years.